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Bed & Breakfast Operations

A Popular Choice

There are a good many Bed & Breakfast establishments throughout New Zealand and they offer a unique and distinctive accommodation experience for the guest.  These broadly include homestays, farmstays and accommodation provided in heritage and/or luxury buildings.  Locations range from convenient city addresses to remote and isolated get-away settings, with some being aimed at the very top end luxury market. 

B&B’s offer a more personalised experience, often reflecting the character and tastes of the hosts to a greater extent than would be experienced in most commercial accommodation.  Generally, B&B’s are a smaller operation where the hosts have a great deal more personal interaction with their guests.  The accommodation package usually includes at least breakfast of course, but often other meals are available as well.  Operators are able to join the Bed & Breakfast Association of New Zealand for industry support (www.bandbassociation.co.nz).

Because B&Bs are “hosted”, meaning that the owner of the property lives on site, most District Plans have a bylaw which allows such commercial activity in a residentially zoned location. This would be important should local bodies decide to enforce their District Plan and restrict the commercial activity of letting properties by way of un-hosted short-stay (such as Airbnb) in a residential zone.

It would seem that the Bed & Breakfast style of accommodation business model is of considerable interest to aspiring operators.  When analysing our keywords for (website) search engine optimisation, it is apparent that the search for B&B’s for sale ranks very highly.  We would prefer to be in a position to offer more such listings to the market.  

When appraising the value of a freehold accommodation operation such as a motel or hotel, certain formulae are used to establish the commercial freehold going concern value, which is based on bottom line profits.  We often find with smaller B&B operations that this approach on its own may not support the underlying real estate value.  When this is the case, then the higher of the two values would prevail and, it may well be that the property will fetch the best price by being sold in the local market based on comparative residential sales in the area.  Clearly a home suitable for a B&B must have a reasonable number of bedrooms and so will perhaps be larger than the average residence, it is likely to be comparable to other top end residential properties in the market.  

We are always pleased to hear from any Bed & Breakfast operators who would like to discuss listing their property for sale and of course from any parties interested in purchasing into the industry.  Any questions or comments on various aspects of this particular niche would be most welcome.  

Kelvyn Coffey
Principal
© Coffeys Tourism Property Brokers Ltd

 

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